The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) has ruled that GST not payable on Rent for lockers provided in bus stands by a Municipal Corporation.
The Appellant, Erode City Municipal Corporation is a “Municipality” as defined in clause (e) of article 243P of the Constitution. They are rendering taxable services (viz) renting of immovable property service, mandap keeper service and are doing the functions entrusted to a municipality under twelfth Schedule to Article 243W of the Constitution.
The applicant has sought the advance ruling on the issue whether the Rent for locker provided in bus stand by the appellant can be covered under Twelfth Schedule to Article 243W of the Constitution.
The coram of M.A.Siddique and M.V.A.Chaudhary has held that to be an activity undertaken by the Municipality as a function entrusted under 243W of the Constitution and the service of rent or fee collection for such a facility is neither a Supply of Goods nor a supply of Service as per Notification No. 14/2017-CT (Rate).
“The transaction between the corporation and the contractor is an activity/transaction undertaken by the local authority, engaged as public authority. The requirements explicitly stated in section 7(2)(b) are met. Further, in as much as this transaction/activity undertaken by the corporation is an activity covered under the above notification, this transaction/activity under si. No. 1 to 9 and 13 (‘except. SI.No. 5A Charges for TV advt. in Bus Stand; 5C- Flower shop in bus stand in open space C SI.No. 7-Bunk Stall’) listed by the AAR as neither a supply of goods nor a supply of service are available to contractors also provided the same are rendered as hack to back services to the appellant,” the AAAR said.
“In respect to the question pertaining to whether the charges obtained for the service of road cutting for the purpose of laying cables by telephone companies alongside roads on contract basis is a composite supply, the question is answered in affirmative. Though two charges are collected by the appellant for road cutting and annual rent for cables running across the road, it can be seen that unless road is cut, cables cannot be laid and mere road cutting without laying of cables is useless. Therefore, both the services have to run in tandem with respect to the telephone companies and the methodology of collection of money is immaterial to the fact of the activities of road cutting and laying of cables, which is indeed a composite supply, it must also be noted that this is a factual question and is restricted to the particular activity of road cutting followed by laying of cables by telephone companies and therefore, the same is not to be extended to all the types of road cutting activities,” the AAAR further added.
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